First time buyers boosted by lower deposits - Mortgages - News - Moneyfacts

News

First time buyers boosted by lower deposits

First time buyers boosted by lower deposits

Category: Mortgages

Updated: 14/01/2011
First Published: 14/01/2011

MONEYFACTS ARCHIVE
This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

The size of the deposit that first time buyers have to find to secure their first mortgage has dropped to its lowest level in two years.

The Council of Mortgage Lenders (CML) said that although credit criteria remained tight, loan-to-value ratios appeared to have eased a little, particularly for first time buyers.

Those looking to take their first step onto the housing ladder borrowed 80% of their home's value in November.

It is the second month in a row this figure has been reported, and the highest the market has seen since November 2008.

Also encouraging is the news that first time buyers took out 16,400 loans in November, a 3% increase from October.

Although the figure was 19% down on that seen in November 2009, the CML said
year-on-year comparisons were lower across all areas of the mortgage market due to the distortions caused by buyers snapping up properties before 2009's stamp duty concession came to an end.

Despite the recent relaxation in deposit requirements, Michael Coogan, CML director general, does not expect the mortgage market for first time buyers to get too much easier in 2011.

"It is encouraging to see credit criteria becoming a little more liberal for first time buyers," Coogan adds.

"But the funding and capital constraints on lenders will continue to exert a dampening effect on lending, and criteria are unlikely to loosen substantially."

Mortgage activity overall remained broadly unchanged during the month.

Loans for remortgage showed a small increase compared with October, while loans to home movers saw a slight drop.

For all home buyers, the proportion of income needed to cover the mortgage interest dropped to an all-time low of 10.7% in November.

If you're a first time buyer trying to make your way onto the property ladder, our first time buyer best buy chart could be the difference between you securing your first home or not. All the latest first time buyer mortgages can be found here.

Find the best mortgage for you - Compare first time buyer mortgages

Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.

Related Articles

Goodbye to the Help to Buy Guarantee

On 31 December, phase two of the Help to Buy initiative will be withdrawn from the market. It’s certainly done wonders for the high loan-to-value sector, so we thought we’d take a closer look at the significance of the scheme and the effect it’s had.

Remortgaging bounces back

Remortgaging has been enjoying a welcome boost in recent months, despite September’s slight dip, with many homeowners capitalising on record low mortgage rates to boost their finances.

Bank of Mum and Dad holds the (house) key

The Bank of Mum and Dad is an important source of finance for many young adults, and it seems that they still hold the key – in more ways than one.
 
Close